"COP27 will investigate faster, more reliable ways to provide vulnerable countries with the finance needed to benefit from transition opportunities and minimise their exposure to climate risk and harm."
Anne Lapierre, Norton Rose Fulbright global head of energy
"Integrity, nature restoration, and the need for rapid scale-up will be the larger themes shaping highly technical carbon market discussions at COP27."
Elisa de Wit, Norton Rose Fulbright global head of carbon markets.
Introduction
The COP27 climate summit in Egypt will be unlike previous COPs – partly because climate finance discussions will be broader in scope, and because the talks will focus heavily on fulfilling commitments, not just making new pledges.
The talks will take place at a time of unprecedented turmoil in the global economy, which has disrupted energy and food supply chains, and as extreme weather events take an increasingly heavy toll on nations, as well as on nature.
Finance will be a key theme
On the finance front, the COP27 talks are expected to focus heavily on the provision of finance to compensate vulnerable countries for unavoidable climate-related "loss and damage".
Despite the significance of the issue for the most climate-vulnerable countries, limited progress on finance for loss and damage has been made at previous COPs.
This year is certain to be different, particularly because Egypt has emphasised its special responsibility to ensure the needs of all African countries are dealt with at COP27, and many of these nations are especially exposed to the dangers of climate change.
In addition to loss and damage, this is the first COP at which attention will be focused on the failure of developed countries to annually mobilise US$100 billion of finance for climate mitigation and adaption by 2020, as promised at COP15 in 2009.
The OECD has concluded developed countries fell short by about US$16.7 billion in 2020, and has pointed out that no more than 25 per cent of what was provided went towards adaptation efforts.
That will be of particular concern at this COP, given that the COP27 presidency has emphasised the importance of providing support for climate change adaptation.
COP27 will also start ministerial-level discussions on a new financial commitment – "the new collective quantified goal" for finance – that will take effect once the $100 billion annual pledge expires in 2025.
Work still to be done on carbon markets
On the carbon markets front, there are important aspects to be dealt with at COP27, even though last year's COP26 talks delivered the all-important Article 6 rulebook that will underpin international carbon trading and transactions.
An array of administrative and technical issues must be resolved in order to fully operationalise markets, although these won't be fully dealt with at COP27.
For article 6.4, which creates a new international crediting mechanism, progress is needed on transitioning the pre-existing Clean Development Mechanism, developing new crediting methodologies, monitoring and reporting, the treatment of land-based activities, and the need to build capacity in countries new to carbon markets.
Making progress on the detailed carbon market rules will be crucial, given that more than 80 per cent of countries have signalled they intend using market mechanisms to help meet their international emissions reduction commitments, as set out in their nationally-determined contributions, known as NDCs.
Scaling mitigation and ambition
Other matters up for discussion will be the design of a work program to urgently scale up mitigation and ambition. The work program was created at COP26, but that meeting didn't provide any guidance on what it should look like, and the process will be formally operationalised at COP27.
Similarly, COP27 will operationalise an annual ministerial roundtable on pre-2030 ambition that was proposed at COP26.
COP27 will also involve discussion of the Global Stocktake of collective progress on mitigation, adaptation and finance, which is referenced in Article 14 of the Paris Agreement and was instigated at COP26 in Glasgow.
The Stocktake is expected to inform the regular updating and strengthening of national NDC climate pledges made by individual economies.
However, the Stocktake is still in its assessment phase and the key findings won't be delivered until COP28 in 2023 in Dubai.
Outside the COP27 formal negotiating track, some countries are expected to strengthen their NDCs either at or just before the COP, and there will inevitably be a range of important new alliances and pledges launched.
New initiatives
One to look out for is a new Forests and Climate Leaders Partnership, strongly supported by COP26 president Alok Sharma, which will have its first meeting at COP27.
Progress towards halting and reversing forest loss has been slow, and the launch of a new forests partnership to speed efforts at this African COP is particularly appropriate, given that the forests of Africa's Congo Basin – which span six countries – are the world's largest forest carbon sink.
Another potentially significant launch at COP27 will be the Global Shield Against Climate Risks, a finance initiative jointly developed by Germany (in its 2022 G7 presidency role) and finance ministers of the V20 group of countries that are systematically vulnerable to climate change.
The COP is also likely to deliver further clarity on actions by signatories to the voluntary Global Methane Pledge, and by participants in the recently launched Green Shipping Challenge, which is spearheaded by the US and Norway.
COP27 key facts:
The 27th conference of the parties (COP) to the UN Framework Convention on Climate Change (the parent treaty to the Paris Agreement) will take place in the Egyptian city of Sharm el-Sheikh from November 6 to 18.
Egypt's Minister of Foreign Affairs, Dr Sameh Shoukry, will be president of COP27, while Egypt's Minister of Environment Yasmine Fouad will be COP27 envoy.
More than 30,000 people are registered to attend, representing governments, businesses, non-government organizations and civil society groups.
The 197 Parties to the UNFCCC treaty often negotiate together in blocs, such as the G77 and China, the Africa Group, the Arab States (which includes Egypt), the Least Developed Countries, the Umbrella Forum (which includes Australia, Canada, Japan, the US and Ukraine), the Small Island Developing States, and the Independent Alliance of Latin America and the Caribbean.
In addition to the COP27 negotiations, there are thematic days. This year's themes are: finance, science, youth and future generations, decarbonization, adaptation and agriculture, gender, water, action for climate empowerment (Ace) and civil society, energy, and biodiversity, as well as a solutions day.
The COP will take place following the release of a new report from the UNFCCC that shows the combined climate pledges of the 193 signatories to the Paris Agreement would put the world on track for a temperature rise of about 2.5 degrees Celsius, if fully implemented.
By Anne Lapierre and Elisa de Wit
Norton Rose Fulbright will be represented at COP27 by Anne Lapierre and Elisa de Wit, along with Johannesburg-based head of the Norton Rose Fulbright Africa team, Gregory Nott, and Cape Town-based senior associate James Ross. Norton Rose Fulbright will provide regular client updates from the talks.
